Ed Davey has labelled Rishi Sunak's Spring Statement a "swindle" and accused the Chancellor of doing "nothing" for families facing huge hikes in the cost of living.
Households face the biggest fall in living standards on record despite Mr Sunak promising tax cuts for millions of workers to address soaring inflation and the economic impact of the war in Ukraine.
The Chancellor shielded lower earners from the impact of the forthcoming National Insurance hike, slashed 5p off fuel duty and promised to cut income tax by 1p in 2024.
But economic growth forecasts were downgraded and inflation is set to reach its highest level for 40 years, leading to household disposable incomes falling by 2.2 percent per person in 2022-23.
Inflation is forecast to hit 8.7 percent in the fourth quarter of 2022 and to average 7.4 percent over the year, with wages failing to keep pace with rising prices.
The OBR said inflation – combined with rising taxes – will “weigh heavily on living standards in the coming 12 months”.
Leader of the Liberal Democrats, Ed Davey speaking exclusively with GB News.
GB News
The leader of the Liberal Democrats exclusively told GB News' Tom Harwood: "This is a total swindle.
"The Chancellor is giving with one hand and taking back with the other.
"We’re facing, according to the Office for Budget Responsibility, a cost of living crisis, the worst for over 50 years, inflation is at its highest for over 40 years.
"People are drowning in bills. Energy bills, heating bills, motor bills, food bills.
"They needed a lifeboat from the Chancellor and they’ve got nothing.
"He’s done nothing for the cost of living, nothing for eye watering inflation and nothing for the schools and hospitals who are going to see their budgets cut in real terms by this incredibly high inflation.
"The Chancellor is living on a different planet, this is a swindle, it’s not what people need."
Despite a £6billion cut in national insurance and a previously announced £9billion package to help with energy bills, “real household disposable incomes per person fall by 2.2 percent in 2022-23”, the biggest hit in a single year since records began in 1956-57.
The cost-of-living crisis, driven by fuel and energy prices which were rising even before Vladimir Putin’s invasion of Ukraine, will be exacerbated in April by the 1.25 percentage point hike in national insurance to fund the NHS and social care.
Chancellor of the Exchequer Rishi Sunak delivering his Spring Statement in the House of Commons.
House of Commons
But Mr Sunak unveiled a plan to increase the threshold at which people start paying national insurance contributions (NICs) by £3,000 to £12,570 from July, benefitting around 30 million workers with a tax cut worth more than £330.
It will mean 70 percent of workers will pay less national insurance than they otherwise would have, even after April’s tax hike.
Mr Sunak said his tax plan “delivers the biggest net cut to personal taxes in over a quarter of a century”.
But the Chancellor acknowledged the war in Ukraine and sanctions on Russia are “not cost-free for us at home” and present a “risk” to the recovery.
Despite the measures announced by the Chancellor, the overall burden of taxes is set to reach the highest level since the late 1940s by 2026-27.